Breaking News  Regarding SBA EIDL and Agricultural Businesses

The SBA announced this morning (5/4/20)  at 9:30 AM that they will begin at 11 AM Central Time accepting new Economic Injury Disaster Loan (EIDL) and EIDL Advance applications on a limited basis only for agricultural related businesses in order to provide unprecedented relief to U.S. agricultural businesses.

• The new eligibility is made possible as a result of the latest round of funds appropriated by Congress in response to the COVID-19 pandemic.
• Agricultural businesses includes those businesses engaged in the production of food and fiber, ranching, and raising of livestock, aquaculture, and all other farming and agricultural related industries (as defined by section 18(b) of the Small Business Act (15 U.S.C. 647(b)).
• SBA is encouraging all eligible agricultural businesses with 500 or fewer employees wishing to apply to begin preparing their business financial information needed for their application.
• At this time, only agricultural business applications will be accepted due to limitations in funding availability and the unprecedented submission of applications already received.
• For agricultural businesses that submitted an EIDL application through the streamlined application portal prior to the legislative change, SBA will process these applications without the need for re-applying.
• SBA made this programming decision in order to provide the greatest emergency funding relief to as many small businesses, private non-profits, and agricultural businesses as possible.

• For more information or to apply you can also go to the SBDC Wisconsin Website.     www.wisconsinsbdc.org/disasterloans or      www.SBA.gov/Disaster.

See below for more information on applying for the EIDL program.   I would encourage farmers to apply as soon as possible!

Details of the EIDL Program and How to Apply

Given the announcement that farmers are now eligible for the EIDL program I have once again included below more information on the EIDL program and how to apply for EIDL so that when the SBA opens the application process again, you can be prepared and apply right away.

EIDL Grant: (These are direct grants made by the SBA …NOT through a bank.)  Read through below and see how to apply.

Grants Up to $10K—-   SBA announced a couple weeks ago that the grant was based on $1,000 per employee up to $10,000.   In the application, it would seem if you are self employed, you would count yourself as an employee, however, the SBA  has not provided official  guidance on this question.

An EIDL Grant does not have to be paid back.

Covered period:  1/31/20 – 12/31/20

Issued:  within 3 days of application  (SBA says this but we have not seen that fast of a turn around.  We have seen it take several weeks if you are approved.)

Eligible entities:

• • Small business concerns
  • Private nonprofit orgs
  • Agricultural Enterprises
  • Self-certification

Use of Proceeds:

• • Payroll
  • Provide paid sick leave
  • Paying rent
  • Mortgage payments
  • Service other debt obligations

Approved:

• • Solely on credit score or alternative method to determine repayability. SBA is waiving many of its typical loan approval requirements.

EIDL Grant and PPP Loan Program interaction:

You can apply for both the EIDL program and the PPP loan.  If you get an EDIL Grant, EIDL Loan and a PPP loan…

1. Any amount of the PPP loan forgiven will be reduced by the amount of any EIDL Grant you received.

2. You cannot use an EIDL Loan for the same purposes as a PPP loan and get the PPP loan forgiven.  For PPP loans  to be forgiven you must use the PPP loan proceeds for payroll related expenses, rents, utilities and mortgage interest.

EIDL Loan (These are direct loans made by the SBA (NOT through a bank…see below how to apply.)

• • Amount – Up to $2 million
  • Interest rate – 3.75% for small businesses, 2.75% for nonprofits.
  • Maturity – up to 30 years. Determined on a case-by-case basis, based upon each borrower’s ability to repay.
  • Interest accrues from day 1 but payments can be deferred up to 12 months.

Use of Proceeds:

• • Pay fixed debts and loans, accounts payable inventory and operating expenses, payroll and other bills.
  • May not be used to refinance long-term debt.  The loans are not intended to replace lost sales or profits or for expansion.

Loan Requirements:

• • Business must not be able to secure credit/loan elsewhere.
  • Must have acceptable credit history
  • Must have repayment ability
  • All loans over $25,000 must be secured with available collateral.  SBA will not decline a loan for lack of collateral.  SBA takes real estate when available.

There is no cost to apply

There is no obligation to take the loan if offered.

How to apply for the EIDL Grant and EIDL Loan Program

You apply directly to the SBA for the SBA EIDL program.  You don NOT go to the bank.  As stated earlier, right now the SBA is not taking applications.  Assuming the SBA is using the same application as prior to the closure…the application process is as follows:

• There is one application that covers both the EIDL grant and the EIDL loan.

• Key information you will need is your gross sales and cost of sales from 2019.  You could use your 2019 Form 1040 Schedule F (farmers)  or C (business) or other business tax return and pull the numbers you need from the returns.

• Be sure to check the box that you want to be considered for the EIDL grant up to $10,000.  They will ask you the number of employees you have.  The SBA has not provided any “official”  guidance regarding if you are self employed counting yourself and your spouse who works in the farm business as an “employee” when completing the application .  However, it would seem logical that if you are self employed, you would count yourself at least, not sure what to tell you about counting spouse?  and then any other employees you have.  Remember the Grant is based on the “number of employees” you indicate…$1,000 per employee.

The application portal can be found at the Wisconsin SBDC website.  The application is quite short and not to tough.

https://wisconsinsbdc.org/services/covid-19/

Luke Kempen

Director

Wisconsin Small Business Development Center at UW-Eau Claire

7 South Dewey Street,  PO Box 4004

Eau Claire, WI 54702-4004

Email:  kempenls@uwec.edu

Phone:  715-836-5902

http://www.wisconsinsbdc.org/eauclaire

Working to support your success!